investor presentation · technology trends: 18:9 displays, tddi and amoled 2017 q4 driver market...
TRANSCRIPT
: HIMX
Investor Presentation May, 2018
2
Forward looking statements
Factors that could cause actual events or results to differ materially include, but not limited to, general business and economic
conditions and the state of the semiconductor industry; market acceptance and competitiveness of the driver and non-driver
products developed by the Company; demand for end-use applications products; reliance on a small group of principal customers;
the uncertainty of continued success in technological innovations; our ability to develop and protect our intellectual property;
pricing pressures including declines in average selling prices; changes in customer order patterns; changes in estimated full-year
effective tax rate; shortages in supply of key components; changes in environmental laws and regulations; exchange rate
fluctuations; regulatory approvals for further investments in our subsidiaries; our ability to collect accounts receivable and manage
inventory and other risks described from time to time in the Company's SEC filings, including those risks identified in the section
entitled "Risk Factors" in its Form 20-F for the year ended December 31, 2017 filed with the SEC, as may be amended. Images of
devices depicted in this presentation may be representative of those in which Himax has specification, or for reference-only and
may not be associated with actual bill-of-material or design-win in the displayed image. Any association of such, without a
confirmed disclosure of such by the Company or the Company's customer are coincidental. Himax is under strict customer
disclosure guidelines on the release of such information.
3
March 2006Himax IPOs on Nasdaq. Raises $147M with Morgan Stanley
October 2004Forms Himax Display to focus on LCOS microdisplay technology
June 2001Himax Taiwan formed by B.S. Wu
December 2003 Himax Taiwan begins trading on Emerging Stock Board (TW) under "3222"
June 2013Himax completes take out financing of Chimei
February 2007Himax acquired Wisepal, and forms Himax Semiconductor to focus on small and medium sized DDICs
2010-2012Non-driver sales increase gross margins and BOM sales opportunities
Sept 2015AR business hits inflection point with pilot production shipment made to a major US customer
2009GFC reduces sales ~$900 million to ~$700 million. Refocuses effort on non-driver products
August 2005Himax Taiwan delists from Emerging Stock Board
July 2013Signs investment agreement with Google
30 years of digital imagery expertise
Founder B.S. Wu pioneers
flat panel technologies at
Chimei Electronics as CTO
Chairman Wu establishes Himax to
meet DDIC demand for large
panels and fast-growing medium
and small panels
Himax gains market share with
design wins with leading
technology products
companies, worldwide
Himax leads LCOS and WLO
development and innovation of new
display technologies with leading
display and optical expertise, Himax
is uniquely positioned to benefit
from the booming AR/VR sector
and beyond…1990’s 2000’s 2010’s
CORPORATE TIMELINE
2016Mass production and shipment of AR related LCOS and WLO, AMOLED DDIC, and in-cell TDDI
Aug 2016Start expansion for next generation LCOS and WLO production lines
20173D sensing: Leading OEMsHimax + QualcommSoC Players
4
Investment Highlights
Leading Display Driver Provider• Worldwide leading display driver player with a wide range of drivers for panels of all sizes and in-house
intellectual property
• Image technology solutions provider
Diversifying Revenues and Customers• DDIC market share leader
• Top tier customers globally
• Diversifying revenues from DDIC to CMOS image sensors, LCOS microdisplay, WLO, touch panel controllers,
timing controllers, power management IC, and ASIC service
• LCOS & WLO product lines to improve corporate profit margin
• SLiMTM and active stereoscopic 3D sensing
Operational and Public Market Performances• Long term profitability potential with no fundraising since IPO
• Disciplined cost control
• Stable cash flow
• Committed to high dividend payout ratio
• Debt-free: Short-term borrowings offset restricted deposit reported under current assets
Innovative New Products Capturing Growth Markets• Automotive applications and AR/VR related businesses
• Core driver IC business benefit from technology integration, AMOLED DDIC, TDDI and market leader position
• Growth from non-driver products, such as WLO, CMOS image sensors, LCOS microdisplay solutions, touch
panel controllers and integrated touch and display ICs, and timing controllers
Visionary Management Team
1
2
3
4
5
Himax's TOP THREE driver I/C position and global reachInvestment highlights
5
Credit Suisse Jerry Su
Lake Street Capital Markets Jaeson Schmidt
Macquarie Capital Securities Limited Lynn Luo
Mizuho Securities Asia Ltd Kevin Wang
Morgan Stanley Charlie Chan
Nomura Securities Donnie Teng
Northland Securities, Inc. Gus Richard
Roth Capital Partners, LLC Suji Desilva
RW Baird & Co. Tristan Gerra
Summary Financials
* Insider ownership includes executives and board members
Fiscal Year December 31st
Last-Traded Price (05/09/18) $7.02
Basic Weighted Ave. Out. ADS
Diluted Weighted Ave. Out. ADS
Equivalent ADS Out.
172.5M
172.5M
172.1M
Market Capitalization (05/09/18) $1.21B
Insider Ownership* 23.3%
Capital markets snapshot
Covering Analysts
* Source: www.nasdaq.com
Shareholder Makeup
Insider23.3%
Institutional15.1%
Mutual Fund14.2%
Hedge Fund6.0%
Retail41.5%
Date: As of Mar. 31, 2018
6
51.3%61.4%
75.0%
119.0%
63.2%
100.0%
83.3%75.0% 77.5%
89.0%81.4%
$0.24
$40
$67
$56
$44
$21$11
$42$46
$51
$22
$41
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
(US$ M)
$13M
$50M
$33M
$50M
$12M
2007 2008 2010 2011
Executed Share Buyback Unutilized Portion
Share Buy BackDividends
• Distributed a total of $441 million of dividend
since IPO (2017 payout in August)
• Dividends referenced primarily on prior year’s
profitability
Shareholder focused. Returning profits
Returned to shareholders including
dividends and buy-backs since IPO$587
MillionHIMXTDIV since 2014
$ Dividend $
Payout Ratio
$0.20
$0.35
$0.30
$0.25
$0.12
$0.063
$0.25
$0.27 $0.30
$0.13
4.0% 7.0% 10.4% 9.1% 5.9% 3.4% 4.4% 4.1% 4.8%Dividend Yield
EPS 0.57 0.40 0.21 0.19 0.06 0.30 0.36 0.39 0.15
1.4%
0.30
$50M
• Initiated four share buyback programs
totaling $158 million since 2007
• Repurchased a total of 46.5 million ADSs
through March 31, 2018 at average
purchase price per ADS: $3.15
2.9%
0.16
7
Summary Financials
* 2017 IFRS numbers include grant of Restricted Share Units at the end of September at $6.1 million** 2017 Q4 numbers include the disposal of an investment. Total proceeds from disposal are $32.00 million with a pre-tax gain of $23.04 million. Gain after tax is estimated to be $20.74 million, representing a contribution of 12.0 cents earnings per diluted ADS*** Beginning January 1, 2018, adopting International Financial Reporting Standards (“IFRS”) to prepare consolidated financial statements; adjusting comparative period information in accordance with IFRS
Summary financials and guidance
QUARTERRevenues
Gross Margin (%)
IFRS Profit (loss)
IFRS Earnings (loss) per ADS
Non-IFRS Profit (loss)
Non-IFRS Earnings (loss) per ADS
1Q2018***
$162.9M
22.5%
($2.8M)
($0.016)
($2.6M)
($0.015)
1Q2017***
$155.2M
23.1%
$1.2M
$0.007
$1.6M
$0.009
4Q2017***
$181.1M
24.6%
$23.5M**
$0.136**
$23.8M**
$0.138**
YoY
+4.9%
-0.6%
-332.6%
-332.5%
-265.4%
-265.3%
QoQ
-10.1%
-2.1%
-112.0%
-112.0%
-110.8%
-110.8%
YEAR
Revenues
Gross Margin (%)
IFRS Profit
IFRS Earnings per ADS
Non-IFRS Profit
Non-IFRS Earnings per ADS
FY2017***
$685.2M
24.4%
$27.7M*/ **
$0.161*/ **
$33.9M**
$0.197**
2Q 2018 GUIDANCE
***Revenues
***Gross Margin
***IFRS Earnings per diluted ADS
To increase 9% to 14% sequentially, representing a double-digit year-over-year growth
To be around 23% sequentially, depending on final product mix
0.0 to 1.0 cent per diluted ADS
8
• Fabless semiconductor company with
world leading visual imaging processing
technologies
• Global market leader in TFT-LCD display
driver and timing controller ICs
• 200+ customers across Taiwan, China,
Japan, Korea, U.S. and Europe
• 2,999 patents granted and 439 patents
pending approval worldwide as of March
31st, 2018
• NASDAQ-listed since March 2006 (HIMX)
• Around 2,150 employees worldwide; more
than 90% are engineers
• Headquartered in Tainan, Taiwan with 8
R&D centers in Taiwan, China, Korea and
U.S., out of a total of 23 offices across
Taiwan, China, Japan, Korea and U.S.
HeadquartersTainan, Taiwan
A global semiconductor company
Beijing, Shanghai, Suzhou
Fuzhou Ninbo, Foshan
Wuhan, Shenzhen, Hefei,
Xiamen, Chongqing, Xian,
Chengdu, FuQing
Sales
Design
Technical SupportIrvine, CA
Design
Investor Relations
Campbell, CA
Sales
Technical Support
MinneapolisDesign
Manufacturing
Operations
Sales/Marketing
Tainan, Taipei, and
Hsinchu in TaiwanHeadquarters
Design
Manufacturing
Operations
Sales/Marketing
Technical support
Asan,
Bundang
Sales
Design
Technical
Support
Tokyo
Sales
Technical
Support
8
9
Main Operating Companies & SolutionsCorporate structure
Himax Technologies, Inc.
: HIMX
HIMAX TECHNOLOGIES, Ltd.
• TFT-LCD Driver and AMOLED Driver
• TCON and P-Gamma OP
• Touch Controllers
• On-cell Touch
• Pure in-cell Touch (TDDI)
• ASIC Service and IP Licensing
• Power Management ICs
• Wafer Level Optics and 3D sensing modules
• Light guide
• In-house Color Filter Fab for LCOS and CIS
aHIMAX DISPLAY, Inc.
• LCOS Modules for Head-
Mounted Display, Head-up
Display and Pico-projector
Applications
• Phase Modulation for
Communication and
Holographic Displays
HIMAX IMAGING, Ltd.
• CMOS Image sensors
10
In Camera ModulesCMOS Image SensorWafer Level Optics
In DisplaysDisplay DriverTCONPMICLED DriverP-gamma OP
On Touch PanelsController IC
ASIC and IPServicing and licensing
Himax inside consumer electronics
WAFER LEVEL OPTICS CMOS IMAGE SENSORS
ASIC SERVICE & IP LICENSING
DISPLAY DRIVERS
TIMING CONTROLLERS
LCOS MICRODISPLAYS
TOUCH PANEL CONTROLLERS
POWER MANAGEMENT IC& LED DRIVERS
Other 30+
In AR DevicesLCOS, WLO
In VR DevicesOLED SOC
Others
11
Skilled Management of Complex Supply Chains
DISPLAY DRIVER
Fabless manufacturing expertise
WAFER FABRICATION
GOLD BUMPING
PROCESSED TAPE CHIP PROBE TESTING
ASSEMBLY AND TESTING
CMOS IMAGE SENSOR BACK-END
PACKAGE CHIP PROBE TESTING
FT RW
SOC
CHIP PROBE TESTING PACKAGE
FT
Product Lines & 6 Growth Opportunities
12
Samsung 32%
Novatek15%
Synaptics9%
Himax8%Silicon Works
8%
Sitronix5%
Raydium 4%
MagnaChip3%
FocalTech3%
MediaTek3%
Others10%
(8%)
Source: IHS iSupply and company estimates (This covers all TFT-LCD and OLED DDICs)
• One of the leading players in display driver ICs
• Key differentiation from IC peers - total solution offering of
image processing related technologies and leverage of
existing strength in mobile devices
• Comprehensive product portfolio to meet major new
technology trends: 18:9 displays, TDDI and AMOLED
2017 Q4 Driver Market Share
DDIC market share
(28%)
(3Q17 Market Share %)
(15%)
(11%)
Source: Trendforce, IHS iSupply and Company Estimates (This covers all TFT-LCD ONLY)
• Large panel DDIC market share remain strong due to increasing 4K
TV penetration and CHN panel customers’ ramping of new LCD fabs.
• Lackluster smartphone market share caused by seasonality and the
overall weak smartphone market
• Tablet market share remain flat due to weak overall market demand
• Leading market share position in auto applications
13
22.3%
14.1%
36.0%
23.3%
19.7%
9.8%
29.6%
20.3%20.0%
11.3%
29.1%
20.8%22.6%
12.8%
28.6%
21.7%22.3%
9.5%
27.5%
24.4%
22.0%
9.6%
27.6%
22.0%
Large Panel Smartphone Tablet Auto
4Q16
1Q17
2Q17
3Q17
4Q17
1Q18
HIMX TFT Driver IC Market Share by Application
14
Grow large panel DDIC unitSales and market share
Market Trends • Continuously aggressive new Gen 8 above TFT-LCD capacity expansion in China with a special focus on
advanced display technologies
• Leading Chinese panel maker’s shipment continue to rank world No. 1 in February 2018 and dominate in the
No. 1 position of its total TFT-LCD capacity
• Chinese local TV set makers have started to in-source more and Chinese panel makers have started to export
• 4K TV penetration continues to accelerate and 8K TV is beginning to emerge
• Demand of a total solution covering timing controllers, PMICs and driver ICs for advanced features in high
end TVs
1
HIMX Strategies and Market Position
• Major beneficiary of China capacity expansion and in-
sourcing
• Leading market share in China
• Increased shipment of 4K solutions and working with
major panel makers on the development of next gen 8K
TVs
• Himax stands strong as OEMs seeking total solution
providers for better performance, supply chain leverage,
and more reliable engineering support
CUSTOMERS
15
HIMX Strategies and Market Position• Global and China smartphone market share leader as an
independent DDIC and TDDI company
• Capitalize on panel technology advancement trend by
working closely with leading China panel makers and
smartphone makers
• Benefitting from increasing HD+ and FHD+ adoption, TDDI
shipment are set to ramp up in 2Q18
• Joint development projects with many of the major CHN
OLED panel customers
• Anticipate AMOLED DDICs to be one of the long-term growth engines for small panel DDIC business
• Global market share leader in automotive applications:
engaged all of the major auto panel manufacturers
worldwide for long-term partnerships
2Market Trends • Demand for full-screen 18:9 display driver ICs remains solid
• Higher HD+ and FHD+ In-Cell TDDI penetration
• Chinese panel makers have committed tremendous capital
to build 9 brand new OLED fabs from now to 2022, in full
speed to pull forward the MP schedule
• Automotive display market to grow at the highest rate
among all applications, expected to increase from 135
million in 2016 to 200 million in 2022
CUSTOMERS
Small Medium Display Area by Technology
Source: IHS
Grow S/M panel DDICLaunch new products
16CUSTOMERS
CMOS Image SensorsWLO and CMOS image sensors
Market Trends • Advanced wafer-level optics (WLO); one of the key technologies enabling 3D sensing
• 3D sensing is among the most significant new features for next generation smartphone and tablet
• 3D sensing; a game changing technology for applications such as AR/VR, industrial, IoT, AI, automotive, robotics, military, surveillance and drones
• CIS development accelerating in functionality and new applications
• 3 new solutions needed for Android smartphone edge-to-edge display: structured light and active stereoscopic camera (ASC) 3D sensing for facial recognition, as well as under-display optical sensor for fingerprint authentication
3
Wafer Level ProcessIntegrated Optics
High Accuracy
Scalability In Production
Mini Package Ultra Small Size & Package
Wave-Guide For AR DevicesHelp Create Holographic Images
The Key Interface of AR
Best For IoT/Smart SensingEye Tracking & Gesture Control
3D Depth Sensing
NIR Sensor + WLO & DOE Applications
HIMX Strategies and Market Position• Offer critical technologies in structured light 3D sensing, ASC 3D sensing and optical fingerprint –
immense revenue opportunity with high ASP and margin
Qualcomm/Himax, SLiMTM, structured light based 3D sensing total solution is the highest quality 3D sensing total solution available for Android smartphones
Unique position: majority of the key technologies inside the SLiMTM total solution are developed and supplied in-house
High barrier of entry for any potential competition
Best performance in all of 3D depth accuracy, indoor/outdoor sensitivity, power consumption and dimension
Passed the toughest eye safety standards with a proprietary glass broken detection mechanism to safeguard the user from any potential harm.
Equipped with the ASIC for 3D depth decoding - free up smartphone’s AP for other applications and lower end platform with less computing power
Mass production ready - high ASP and profit margin
ASC 3D Sensing: Joint developement with an industry leading AP platform player well underway to bring face recognition and 3D features to the high volume Android mass market smartphones – target for MP ready by end of 2018
Optical fingerprint: working with an industry leading fingerprint solution provider to develop an under-display optical fingerprint product, targeting smartphones using OLED displays
• WLO: exceptional design know-how and proven MP track record
Deliver consistent product quality, production ramp and high yields
• New smart sensor launch: Near Infrared (NIR) sensors for 3D sensing and ultra-low power computer vision (AoSTM)
NIR Sensor: low noise HD, or 1 MP, and 5.5 MP
AoS: launch of the WiseEyeTM IoT sensors with Emza and DSP Group for consumer appliances and industrial IoT applications
Ultra Low Power Sensor Applications
17
4
Market Trends
• Many top name multinationals or new start-ups are investing heavily to develop the AR ecosystem -- applications, software, operating system, system electronics, and optics
• Limited companies provide the combination of R&D, joint development and manufacturing expertise
• Significant barrier of entry to new market entrants and existing technology companies without scalable manufacturing
CUSTOMERS
HIMX Strategies and Market Position
• The leader in microdisplay with patent protected technology, in-house facilities and shipping record >2M units
• Focus on AR goggle devices and HUD for automotives
• List of AR goggle device customers covers many of the world’s biggest tech names
• Continue close collaboration with tier 1 AR glasses producers, expect OEM product introductions
• Strategic partners with top tier customers to provide phase modulation panel for communication and holographic display applications
• Great progress in developing high-end HUD for automotives – major revenue contribution in 2019 at the earliest
• GM & OPM significantly higher than corporate average
• LCOS represents a significant long term growth opportunity for us
Front Lit LCOS Advantages
• Compact Form Factor
• Brightness
• Power Efficiency
• MP Efficiency &
Readiness
Optical Engine with
LCOS Module
AR Glasses
HUD
Industrial Helmet
Story BeamPico Projector
LCOS Microdisplays
18
Touch Panel ControllersTouch panel controllers
CUSTOMERS
Market Trends
• Expect higher TDDI penetration in smartphones going forward and continue to accelerate
• Full screen 18:9 aspect ratio displays becoming the trend
5
HIMX Strategies and Market Position
• TDDI pure in-cell solution
Benefit from 18:9 display (FHD+ & HD+) trend as a front runner
Shipment started 4Q17, expecting to accelerate starting 2Q18
Numerous design-wins for HD+ and FHD+ projects with top-tier names and most panel makers in China for its capability to enable super-slim bezels for customers panel design
Leverage long-standing and widespread relationships in technology development and business with panel makers to be a market leader
Significant revenue contribution starting 2018
New generation FHD+ TDDI with COF package to enable super-slim bezel design for premium smartphone models
The world’s first TDDI design-wins for automotive application with mass production target of late 2019 to 2020
Higher ASP and better margin than traditional driver IC
5’~5.5” Smartphone,
On-cell / GFF
5.65” FHD+ Smartphone,
In-cell TDDI
1.4” Smart watch,
OLM GFM
8” Tablet PC,
In-cell TDDI
Conventional Gen2 COG Gen2 COF
19
Market Trends • TCON becoming the key enabler of next generation ultra-high
resolution panel development
• Continuously aggressive new Gen 8.5 and Gen 10.5 TFT-LCD
capacity expansion in China with a special focus on advanced
display technologies
• Chinese local TV set makers have started to in-source more
and Chinese panel makers have started to export
HIMX Strategies and Market Position
• Benefitting from the increasing demand from China due to capacity
expansion, in-sourcing and more export orders
• UHD TV TCON takes the leading position in China market
In-house RGBW technology help customers to reduce panel cost while successfully maintaining the required display performance
• Well-positioned in the trending 4K/8K display market for the capability of providing a total solution consisting of TCONs, PMICs and driver ICs
• eDP TCON widely adopted by tablet and NB applications
Fully-covered eDP Technologies: 5.4G/lane, eDP1.4b and G-Sync
for high resolution applications
TCON
CUSTOMERS
Timing controllers6
Timing Controller Growth by Application
-
5,000
10,000
15,000
20,000
25,000
Car MNT NB/Tablet/Others TV-HD/FHD TV-UHD/UHD+
20
2018 YTDFinancial Review
Shipment and revenue history
21
One of the Leading Semiconductor Companies
$56
$132
$300
$540
$745
$918
$833
$692
$643$633
$737$771
$841
$692
$803
$685
$163
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 1Q18
(US$ M)
3492
221
460
719
975
1,069
1,1521,1561,165
1,2971,337
1,309
1,464
1,311
306
0
100
200
300
400
500
600
700
800
900
1,000
1,100
1,200
1,300
1,400
1,500
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 1Q18
(unit, M)
Volume Revenues
1,516
• Global market share leader in small and medium-sized panel driver ICs
• Increasing non-driver sales to diversify sales base and improve gross margin
• Market leader in 3D sensing – Structured light and active stereoscopic 3D sensing total solutions
will contribute very significant revenue and profit growth in the next 2-3 years starting 2018
• Advanced Wafer Level Optics, CIS and LCOS microdisplays GM & OPM significantly higher than corporate average Phenomenal ROI AR technology provider of choice
• Total solution component provider
A better balanced product mix….
22
0%
20%
40%
60%
80%
100%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 1Q18
81.9% 78.2%71.3%
57.0%42.7% 41.4%
29.7% 26.9% 32.4% 34.0% 32.8% 36.4%
15.5% 16.7%22.0%
34.8%
44.6% 44.6%53.9%
53.1%48.6% 46.0% 44.5%
44.0%
2.60% 5.1% 6.7% 8.2% 12.7% 14.0% 16.4% 20.0% 19.0% 20.0% 22.7% 19.6%
Large Panel Drivers S/M Panel Drivers Non-Driver
Revenues(US$ M)
$918 $833 $692 $643 $633 $737 $771 $841 $692
Category Product Mix
$803 $685 $163
Largely reduced dependence on one single customer, Innolux.
• Diversifying product revenues by non-driver product wins and leveraging existing customers
• Innolux disposed of its entire equity holding in Himax on June 19th, 2013, ending its status as Himax’s related party
• Growing shipment to new panel manufacturer customers in China, Korea and Taiwan since 2013
• Market share leadership in core driver IC business
• Benefiting from China localization, capacity expansion
• Expanding customer base to include many global top tier tech companies for LCOS microdisplay, Wafer Level Optics, 3D sensing and CMOS image sensors
Customer Mix
0%
20%
40%
60%
80%
100%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 1Q18
59.6% 62.5% 64.6%52.7%
40.8%34.2%
22.6% 19.6% 21.1% 15.2% 15.5% 13.5%
40.4%37.5% 35.4%
47.3%59.2%
65.8%77.4% 80.4% 78.9% 84.8% 84.5% 86.5%
Innolux Non Innolux
Revenues(US$ M)
$918 $833 $692 $643 $633 $737 $771 $841 $692
….and a diversified customer base
Customer Diversification
23
$803 $685 $163
24
• GM retraction in 2015: higher mix of China sales and competitive
pricing in the LDDIC market
• GM improvement in 2016
Resolution migration improved GM of SMDDIC
Favorable product mix with higher non-driver sales %: LCOS
and WLO sales growth
Lower GM in 4Q16 due to an additional inventory write-down
• Improved GM in 2H vs. 1H in 2017 driven by more favorable
product mix which due primarily to WLO shipments starting in July,
2017, and the one-off customer reimbursements related to AR
goggle device business in Q3
• Further GM improvement from non-driver business growth
$918.2
$832.8
$692.4 $642.7 $633.0
$737.3 $770.7
$840.5
$691.8
$802.9
$685.2
$162.9
22.0%
24.5%
20.5%21.0%
19.8%
23.1%24.6% 24.5%
23.6%24.2% 24.4%
22.5%
0.0 %
5.0 %
10. 0%
15. 0%
20. 0%
25. 0%
30. 0%
$-
$20 0.0
$40 0.0
$60 0.0
$80 0.0
$1,0 00.0
$1,2 00.0
$1,4 00.0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 1Q18
Gross marginGross margin is a key business focus
• Successful transformation since 2011
• Revenues growth and improved gross margin in 2016 due
to product mix
• Positive about long term growth
Revenues & Gross Margin %(US$M)
Better product mix lifts blended margin
$90.9 $88.3 $90.0 $103.3
$115.1 $125.1 $137.6 $129.7
$95.1 $95.0 $117.4 $113.9 $106.7
$88.1 $80.9 $75.6
$74.7 $65.2
$76.0 $80.5
$73.7
$60.1 $56.7
$79.8 $67.2
$56.2
1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18
China Sales ROW Sales
GM 25.7%GM 23.8%
GM 21.8%
GM 22.9%GM 26.2%
GM 26.1%GM 25.6%
GM 19.1%
GM 23.1%GM 23.8%
GM 25.5%
GM 22.5%
Geographical Revenue Mix & Quarterly GM (US$M)
GM 24.6%
• Continue to streamline core business R&D efforts and execute expense control through product integration• Unprecedented Phase I capital expansion in 2017: construction of a new building, increase of WLO capacity for the
anchor customer and MP ready for SLiM and ASC 3D sensing solutions• Completion of the new building in 2017: house additional WLO capacity, the new active alignment equipment, and
extra office spaces• Increase Phase I capex to meet the substantially rising demand of 3D sensing Android market starting 2019• Continue committing on R&D and customer engineering on our strategic growth area that will bring in handsome
return in the next few years• Short-term profit setback• Debt free
The bottom line
$112.6
$76.4
$39.7 $33.2
$10.7
$51.6$61.5
$66.6
$25.2
$50.9
$27.7
-$2.8
$0.57
$0.40
$0.21$0.19$0.06
$0.30$0.36$0.39
$0.15$0.30
$0.16
-$0.02
-2
-1.5
-1
-0.5
0
0.5
-$50
$0
$50
$100
$150
$200
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 1Q18
IFRS Profit and EPS(US$M / US$)
25
$98.1
$143.9
$98.3 $99.7$109.0
$103.5
$117.5
$133.2 $132.5 $135.1
$158.7
$39.8
10.7%
17.3%14.2%
15.5%17.2%
14.0%15.2%15.8%
19.1%16.8%
$0
$50
$100
$150
$200
$250
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 1Q18Revenues $918.2 $832.8 $692.4 $642.7 $633.0 $737.3 $770.7 $840.5 $691.8 $802.9 $685.2 $162.9(US$M)
OPEX and % of Total Sales(US$M / %)
23.2%24.5%
$87.6$71.3 $76.4 $79.0
$70.9$80.4
$91.8 $94.4 $95.8
$117.7
$30.0
$56.3
$27.0 $23.3 $29.9 $32.6$37.1
$41.4$38.1
$39.3
$41.0
$9.8
$0
$20
$40
$60
$80
$100
$120
$140
$160
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 1Q18R&D Expense Operating Expense ex. RD
Performance history
(US$ M)
• Robust profit growth in 2016 as a result of revenue
growth and GM enhancement
• Short-term profit setbacks caused by additional R&D
expense and WLO capacity expansion
• Positive long term profitability outlook
• Expect significant revenue & profit growth in 2018
Operating and R&D Expenses EBITDA
• Continue investing heavily on R&D and customer engineering on our
strategic growth areas including WLO, CIS, TDDI and AMOLED; OPEX in 2017
vs. 2016 up 17.5%
• 2014, 2015 & 2016 & 2017 OPEX include RSU $9.3mn, $4.5mn, $9.2mn and
$6.1mn26
$143.9
$98.3$99.7
$108.9$103.5
$117.5
$133.2 $132.5$135.1
$158.7(US$ M)
$76.4
$57.5
$49.1
$30.1
$79.5
$90.1
$100.6
$47.5
$73.8
$47.7
$1.3 $0
$20
$40
$60
$80
$100
$120
$39.8
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 1Q18
For the Fiscal Period Ended1Q-2018
(Unaudited)
1Q-2017
(Unaudited)
4Q-2017
(Unaudited)
Y2017
(Unaudited)
Revenues $162,851 $155,210 $181,081 $685,167
Cost of revenues 126,254 119,309 136,499 518,142
Gross profit 36,597 35,901 44,582 167,025
Gross margin 22.5% 23.1% 24.6% 24.4%
Operating expenses
Research and development 30,040 25,333 29,387 117,662
General and administrative 4,906 4,601 5,401 20,461
Sales and marketing 4,895 4,369 5,515 20,543
Total operating expenses 39,841 34,303 40,303 158,666
Operating income (loss) (3,244) 1,598 4,279 8,359
Non-operating income (loss) (800) (813) 22,573 21,733
Profit (loss) before income taxes (4,044) 785 26,852 30,092
Income tax expense (benefit) (728) 122 3,989 4,554
Profit (loss) for the period (3,316) 663 22,863 25,538
Add: Loss attributable to noncontrolling interests 487 553 681 2,142
Profit (loss) attributable to Himax stockholders ($2,829) $1,216 $23,544 $27,680
Non-IFRS Profit (loss) attributable to Himax stockholders ($2,575) $1,557 $23,772 $33,889
IFRS earnings (loss) per ADS attributable to Himax stockholders (in cents)
Basic (1.6) 0.7 13.6 16.1
Diluted (1.6) 0.7 13.6 16.1
Non-IFRS earnings (loss) per ADS attributable to Himax stockholders (in cents)
Basic (1.5) 0.9 13.8 19.7
Diluted (1.5) 0.9 13.8 19.7
Income StatementReported financials – Income StatementMarch 31, 2018
27
US$’000
March 31, 2018(Unaudited)
December 31, 2017(Unaudited)
March 31, 2017(Unaudited)
Assets
Current Assets:
Cash and cash equivalents $139,806 $138,023 $190,345
Financial assets at amortized cost 11,753 10,358 5,220
Financial assets at fair value through profit or loss 361 521 3,891
Accounts receivable, net 166,603 188,774 169,093
Inventories 147,962 135,200 148,260
Restricted deposit 147,000 147,000 107,414
Other current assets 23,169 42,745 20,444
Total current assets 636,654 662,621 644,667
Financial assets at fair value through profit or loss 1,600 1,600 10,562
Financial assets at fair value through other comprehensive income 1,522 1,522 1,680
Equity method investment 9,905 10,739 2,235
Property, plant and equipment, net 95,953 84,575 46,517
Goodwill 28,138 28,138 28,138
Other Assets 20,286 13,998 13,774
Total Assets $794,058 $803,193 $747,573
Liabilities and Equity
Current liabilities:
Short-term borrowings* $147,000 $147,000 $107,000
Accounts payable 134,970 139,933 115,941
Other current liabilities 56,441 56,793 47,192
Total current liabilities 338,411 343,726 270,133
Other liabilities 4,956 5,879 9,009
Himax stockholders' equity 452,917 455,323 468,525
Noncontrolling interest (2,226) (1,735) (94)
Total Liabilities and Equity $794,058 $803,193 $747,573
Balance Sheet
* Short-term borrowings is guaranteed by restricted deposit28
Reported financials – Balance SheetMarch 31, 2018
US$’000
1Q-2018(Unaudited)
4Q-2017(Unaudited)
2017FY(Unaudited)
Profit (loss) for the period ($3,316) $22,863 $25,538
Depreciation and amortization 5,098 5,098 16,680
Bad debt expenses 0 155 155
Share-based compensation expenses 91 93 997
Gain on disposals of property, plant and equipment 0 (1) (26)
Changes in fair value of financial assets at fair value through profit or loss (1) (23,064) (23,226)
Interest income (549) (554) (2,225)
Finance costs 252 250 878
Income tax expense (benefit) (728) 3,989 4,554
Share of losses of associates 844 483 1,200
Inventories write downs 2,954 3,418 12,298
Foreign currency exchange gains of financial assets (222) 0 0
4,423 12,730 36,823
Changes in:
Decrease (increase) in accounts receivable 22,171 (5,901) (1,665)
Decrease (increase) in inventories (15,716) (8,506) 2,250
Increase (decrease) in accounts payable (4,963) 14,380 (2,336)
Others (3,597) (4,847) 7,404
Cash generated from operating activities 2,318 7,856 42,476
Interest received 166 883 2,165
Interest paid (170) (170) (565)
Income tax paid (37) (273) (14,683)
Net cash provided by operating activities $2,277 $8,296 $29,393
Purchases of property, plant and equipment (18,550) (15,537) (39,292)
Acquisitions of financial assets at amortized cost (1,897) (756) (5,572)
Proceeds from disposal of financial assets at amortized cost 754 0 744
Acquisitions of financial assets at fair value through profit or loss (4,330) (4,934) (41,523)
Proceeds from disposals of financial assets at fair value through profit or loss 26,506 15,088 56,375
Others (3,243) (6,020) (5,820)
Net cash used in investing activities ($760) ($12,159) ($35,088)
Payments of cash dividends 0 0 (41,281)
Release (pledge) of restricted deposit 0 0 (9,000)
Proceeds from short-term borrowings 0 27,000 151,161
Repayments of short-term borrowings 0 (27,000) (142,161)
Others 11 105 67
Net cash provided by (used in) financing activities $11 $105 ($41,214)
Effect of foreign currency exchange rate changes 255 299 480
Net increase (decrease) in cash and cash equivalents $1,783 ($3,459) ($46,429)
Cash and cash equivalents at beginning of period $138,023 $141,482 $184,452
Cash and cash equivalents at end of period $139,806 $138,023 $138,023
Summary of Cash Flow
29
Reported financials – Cash Flow StatementMarch 31, 2018
US$’000
30
Management & Board
Dr. Biing-Seng Wu, Chairman of the Board - Dr. Wu, the founder of Himax, previously served as
President, CEO and a Director of Himax Taiwan. As a pioneer of TFT-LCD panel industry in Taiwan, Dr. Wu has
been active in the TFT-LCD panel industry for over 20 years. With 61 patents related to Flat Panel Display
granted worldwide, Dr. Wu has made significant contributions to Taiwan panel industry including the
completion and operation of Taiwan’s very first TFT-LCD plant, the winner of Outstanding Industry
Contribution Award at the Gold Panel Awards 2009 from Ministry of Economic Affairs, etc. Dr. Wu holds a
B.S. degree, an M.S. Degree and a Ph.D. Degree in Electrical Engineering from National Cheng Kung
University. With well-recognized outstanding research and development capabilities, Dr. Wu received
numerous awards including National Invention Award of Taiwan from Taiwan Executive Yuan in 1992,
Research Achievement Awards from Industrial Technology Research Institute for consecutive 2 years in 1992
and 1993, ERSO Award from Pan Wen Yuan Foundation in 2008, etc.
Jordan Wu, President, CEO and Director - Mr. Wu, co-founder of Himax, previously served as the
Chairman of the Board of Himax Taiwan since April 2003. Prior to joining Himax Taiwan, he served as CEO of
TV Plus Technologies, Inc. and CFO and Executive Director of DVN Holdings Ltd. in Hong Kong. Mr. Wu holds
a B.S. degree in Mechanical Engineering from National Taiwan University and an M.B.A. degree from the
University of Rochester.
Jackie Chang, Chief Financial Officer - Before joining Himax, Ms. Chang was the CFO of Castlink
Corporation and VP of Finance and Operations for PlayHut, Inc. Prior to that, Ms. Chang was General
Manager -Treasury Control for Nissan North America. She held several positions in Nissan North America
during 1994 -2006 including finance, treasury planning, operations and accounting. She holds a BBA in
Accounting from the National Chung-Hsing University in Taiwan and an MBA in Finance from Memphis State
University.
Founders and management team
31
ContactContact us
Jackie Chang, CFO
Main: +886-2-2370-3999 #22300
US Office: +1 (949) 585-9838 #252
Ophelia Lin, IR Project Deputy Director
Main: +886-2-2370-3999 #22202
Company
Auditor SEC Legal
Counsel
Corporate
Counsel
Greg FalesnikMain: +1 (212) 301-7130
http://www.mzgroup.us
US Investor
Relations